The US dollar remains at the back foot and trades near six-week low against a basket of currencies in early Wednesday. The greenback is pressured by weak recent data, with highlight on anemic Q2 growth rate that could keep Fed on hold for some time and further frustrate investors who were hoping to see some action as early as September.
The dollar Index which measures dollar’s performance against the basket of six major currencies, stands at 95.15 in late hours of Asian session, consolidating above fresh low at 94.93, posted late Tuesday, where strong technical support contained downmove for now. The index remains in steep downtrend that enters the second week, with prospects for further easing on negative technical studies and weak fundamentals.
The Euro holds above 1.1200 handle on Wednesday, consolidating Tuesday’s rally that peaked at 1.1232, the highest level of post-Brexit recovery attempts.
The dollar fell further against Japanese yen, losing 1.5% on Tuesday, after 101.00 support was lost and day ended in long red candle. Focus is at 100.00 threshold and is a matter of time when the pair will break it again, following post-Brexit spike to 98.98, the lowest level since November 2013.
Fresh yen’s strength was boosted by disappointment of the meeting between Japanese PM and central bank Governor that failed in attempts to weaken the yen.
Australian dollar remains resilient and peaked at fresh three-week high at 0.7636 on Wednesday, despite RBA’s action on Tuesday that resulted in 0.25% rate cut.
Spot Gold remains steady and holds near fresh high at $1367, posted on Tuesday. Renewed demand for safe-haven gold came on fresh dollar’s weakness and fading hopes of Fed’s rate hike in the short term.
The yellow metal remains well supported and eyes key barriers at $1375 and $1392, following excellent results of its recovery rally from December 2015 lows, when Gold surged around 28% on rising worries about global economic outlook that boosted demand for safe-haven instruments.
US Crude oil remains among top losers, following fresh extension of steep descend that eventually took out psychological $40.00 support. Early Wednesday’s action holds below $40, now acting as resistance.
Brent Crude Oil holds below $42, with negative overall picture being boosted by oversupply and weak outlook for global economy that reflects demand for crude oil.
Highlights of the day

Asia
China’s Caixin Services PMI fell below expectations in July, on 51.7 release, well below forecast of 52.9 and June’s 52.7 release.

Europe
Series of Services PMI data from Eurozone are focus of Wednesday’s European session, with forecasts mainly unchanged from previous month’s release.
The highlight of European session is UK’s Services PMI for July, due at 08:30 GMT. Forecast shows unchanged numbers from June’s release, however, fears persist of further slowdown in service sector, which slowed to a three-year low last month, following weak releases of manufacturing and construction data after Brexit.

America
ADP data release from US private sector is the first highlight of American session. Data are due at 12:15 GMT, with forecast for July at 170K, slightly below 172K in June. The ADP data are usually used as an indication for coming US NFP data release, due on Friday.
The US Institute for Supply Management’s non-manufacturing survey is forecasted at 56.0 for July. That would be below June’s 56.4 level but still comfortably in the territory above 50 threshold. However, the markets are now looking for any clues they can get as to if and when US interest rates might rise this year. Any suggestion that the dominant service sector is slowing more sharply than investors expect will trigger further pressure on the US dollar.
Data are due at 14:00 GMT.
US EIA Weekly Crude oil Inventories are due at 14:30 GMT. Forecast for the week behind shows expectations for a 1.6 million barrels draw, compared to previous week’s 1.7 million barrels build.
Important levels
USDJPY
The pair extended below 101.00 handle and came ticks away from nest target at 100.60 (Fibo 161.8% projection. Near-term focus remains at psychological 100.00 support (also low of 08 July), break of which would open way towards 98.98 (post Brexit low).
Initial resistance lies at 101.33, followed by 102.00 zone and Tuesday’s high at 102.81.
CRUDE OIL
US oil holds below $40 which was broken on Tuesday. Near-term focus remains at the downside, as technical studies remain firmly bearish, with next supports at $38.99 and $38.84. Broken $40 level now offers initial resistance, ahead of strong $40.89 barrier (200SMA / yesterday’s high).

GBPUSD
Cable surged to fresh three-week high at 1.3363 on Tuesday, signaling possible final break above near-term congestion that was capped under 1.3300 barrier. Technicals returned into bullish mode and support further recover, which may extend towards key short-term barriers at 1.3480/1.3531 in stronger bullish acceleration.
Tomorrow’s BoE’s rate decision is in focus and expected to give more clues about pair’s near-term direction., Market Analysis